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Our ongoing observations about whether the boom has peaked


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On 1/4/2020 at 1:02 AM, EarthQuake said:

I'll say it again, even though I know many will disagree. Distilleries should raise prices until consumers stop hoarding, following delivery trucks around, and creating illegal black market groups just to resell the extremely high demand products. Whistlepig and a few others have done this, and while we can easily mock them for it, they've essentially cut these products out of the secondary market tomfoolery entirely. Will bourbon nerds complain? Of course, but then they'll move on to all of the great, well supplied whiskey that is available every day on every shelf in every store in the country. The unicorn bottles, which are not all that special to begin with, will become even more of a status symbol for the wealthy and the show offs than they are now. But those of us who enjoy bourbon because of how it tastes, not which dead guy's name is on the bottle, will move on and continue to live a full and meaningful life. Maybe some of the status seekers, flippers, and other miscreants will get turned off by the high pricing and eventually leave the market - and we'll be better off for it. That's wishful thinking I know, but a boy can dream.

 

All that said, I do want to call attention to @BottledInBond's excellent response to my post a bit further up the thread, and all the reasons he gives for why the major bourbon players are unlikely to change their pricing models. The hype is real and it is a very effective marketing tool for their lower tier products (it still baffles me that WSR is considered anything but a bottom shelf mixer). So it's all a bit moot in any case.

I'm not sure I follow.  You're saying distilleries should raise prices, but WSR is a bottom shelf mixer?  Why should I pay more than current bottom shelf mixer prices for bottom shelf mixers?  Just because some idiot is willing to pay more than a reasonable price for something doesn't make it actually worth it.  The same thing happened in the stock market in the late 90s and early 2000s: people were buying stocks on the greater fool theory, meaning 'someone is dumb enough to pay more for this stock than I was', rather than because of good fundamentals like P/E ratios, sound management, reliable dividends, innovative new products, etc.  It didn't take but a decade or so for that bubble to burst.  Do you mean that if the distillers raised prices, the bubble would burst sooner and prices would then come back down to what they should be?

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4 hours ago, Clueby said:

200 people lined up for a chance at a store pick Blanton's @ $80.  Sadly, I'm one of them. Boom ain't over.

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Those are actually pretty good prices for that place. 

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This past year, a semi-local store had a private pick of Blanton’s at the exact same price. I passed. FWIW, their Blanton’s pick sold out before their barely more reasonably priced BT, and RR picks. ?

 

Biba! Joe

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51 minutes ago, TheNovaMan said:

 

I'm not sure I follow.  You're saying distilleries should raise prices, but WSR is a bottom shelf mixer?  Why should I pay more than current bottom shelf mixer prices for bottom shelf mixers?  Just because some idiot is willing to pay more than a reasonable price for something doesn't make it actually worth it.  The same thing happened in the stock market in the late 90s and early 2000s: people were buying stocks on the greater fool theory, meaning 'someone is dumb enough to pay more for this stock than I was', rather than because of good fundamentals like P/E ratios, sound management, reliable dividends, innovative new products, etc.  It didn't take but a decade or so for that bubble to burst.  Do you mean that if the distillers raised prices, the bubble would burst sooner and prices would then come back down to what they should be?

So first off, my opinion on WSR is neither here nor there, I am not a barometer for the market as a whole. That was going off a bit on a tangent re: consumer phycology and hype.

 

The market has spoken and by and large very many people are dumb enough to pay a lot of money for Weller, Pappy, BTAC and a handful of other bottles that got popular for one or another reason. My primary argument is that distillers should raise the price on these bottles and pocket the profit directly, rather than watching stores charge massive markup and sit by while black market resellers profit illegally on their product's popularity. The money is being spent by the consumer one way or another, why shouldn't it go to the people who actually make the product?

 

If this would usher a burst to the bubble sooner is an interesting question. I'm not sure the stock market is an apt comparison. Bourbon is a consumable good, and the overall demand for the product represents genuine growth - new customers in the market, many of whom are willing to spend more and more money. Would rising prices eventually burst the bubble? Possibly, however, prices have been rising steadily in the face of significant growth, so I'm not sure where that break point is. But I would guess it's well beyond a price double or even quadruple of Buffalo Trace's most popular, hard to find products.

 

Now to be clear, I'm not suggesting that prices should be raised on every bottle of bourbon. Simply that the bottles which are already being treated more like luxury goods than commodities, should sold at whatever price the market will bear from the producer of the product, not shady middle men. Many will balk at this due to simple self interest, but from a basic economic standpoint it makes sense.

Edited by EarthQuake
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A local neighboring county in Maryland had their semi-annual whiskey event.  The big draw was a guarantee to purchase one of the following (1 OFC 1994, 99 Old Rip's, 12 Weller Full Proof, 42 Old Fitzgerald 15's, or 60 Weller 12's) at MSRP.  Last year at a similar event I got there at 4 am and was number 67 on a Saturday.  This year on a Friday, I got there at 8:30 on Thursday night and was ~ 110.  The boom has been on at warp speed this year.

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1 hour ago, EarthQuake said:

The money is being spent by the consumer one way or another, why shouldn't it go to the people who actually make the product?

Agree 100%

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2 hours ago, EarthQuake said:

..........but from a basic economic standpoint it makes sense.

I'm not so sure. On it's face, your comment makes perfect sense. But.....

We know that the carrot of receiving a certain number of allocated bottles each year causes retailers to carry a large number of products they otherwise might not. If a retailer supports a certain "portfolio" throughout the year, and gives it prime real estate in the store, they get the good stuff.

Price it at secondary and that goes away. I think this is why Sazerac holds their prices.  

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200 people lined up for a chance at a store pick Blanton's @ $80.  Sadly, I'm one of them. Boom ain't over.

20200118_155749.thumb.jpg.bd2ae14b297c9115848d26a1879b32cc.jpg

20200118_152452.thumb.jpg.1285c06e26bd1e6171a233de0a296cde.jpg

 

WTF I don’t want any of this at those prices, I guess the boom is over for me and I’m certainly not going to wait in line for it.

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I'm beginning to think the secondary market and shortages are being driven singlehandedly by Buffalo Trace.  There is literally 40 feet of aisle dedicated to bourbon at all larger liquor stores! Every major distiller has no real problem with supply other than BT.  I say that because today I saw 1792 FPs just sitting on the shelf, I saw bottles and bottles of ECBP just sitting at Costco, and I'm convinced HH is simply limiting HMBiB to copy BT's system.  It's literally only the whacky pent up demand for BT products that continues to be the real problem.  But to that I just shrug and say oh well, i guess they should be applauded for having a good business model.

Edited by BrokeCal
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10 hours ago, JoeTerp said:

A local neighboring county in Maryland had their semi-annual whiskey event.  The big draw was a guarantee to purchase one of the following (1 OFC 1994, 99 Old Rip's, 12 Weller Full Proof, 42 Old Fitzgerald 15's, or 60 Weller 12's) at MSRP.  Last year at a similar event I got there at 4 am and was number 67 on a Saturday.  This year on a Friday, I got there at 8:30 on Thursday night and was ~ 110.  The boom has been on at warp speed this year.

No offense, but this is crazy to me.  There is no way I would stand in line from 8:30 the night before to buy something, let alone a bottle of bourbon.  Seeing that you were 110 in line, I just can't comprehend it.  

 

Don't get me wrong,  I really want to try some of the hard to find bourbons, but I will be patient.  Sooner of later, people will run out of money or move on, then I will be able to get some. 

 

I sort of feel like I would be severely let down though.  Not sure any bourbon could live up to the hype that surrounds Pappy, Blanton's, etc.  I was able to score a bottle of Eagle Rare and was a bit disappointed.  I personally like RR10 better.  People that I work with go nuts over ER.  They buy it up like it has been discontinued.  

 

All this, of course, is just my opinion.  Obviously, there is a significant amount of disposable income in this country and the boom is going strong!

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I'm beginning to think the secondary market and shortages are being driven singlehandedly by Buffalo Trace.  There is literally 40 feet of aisle dedicated to bourbon at all larger liquor stores! Every major distiller has no real problem with supply other than BT.  I say that because today I saw 1792 FPs just sitting on the shelf, I saw bottles and bottles of ECBP just sitting at Costco, and I'm convinced HH is simply limiting HMBiB to copy BT's system.  It's literally only the whacky pent up demand for BT products that continues to be the real problem.  But to that I just shrug and say oh well, i guess they should be applauded for having a good business model.


Uh oh how dare you say anything negative towards BT, be prepared to feel the scorn of its defenders. Also one note 1792 is Barton owned by Sazerac same as BT.
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40 minutes ago, macdad said:

No offense, but this is crazy to me.  There is no way I would stand in line from 8:30 the night before to buy something, let alone a bottle of bourbon.  Seeing that you were 110 in line, I just can't comprehend it.  

 

Don't get me wrong,  I really want to try some of the hard to find bourbons, but I will be patient.  Sooner of later, people will run out of money or move on, then I will be able to get some. 

 

I sort of feel like I would be severely let down though.  Not sure any bourbon could live up to the hype that surrounds Pappy, Blanton's, etc.  I was able to score a bottle of Eagle Rare and was a bit disappointed.  I personally like RR10 better.  People that I work with go nuts over ER.  They buy it up like it has been discontinued.  

 

All this, of course, is just my opinion.  Obviously, there is a significant amount of disposable income in this country and the boom is going strong!

Yeah I couldn't just wait in any line for any bourbon to be honest ....that's just me though.  

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5 hours ago, BrokeCal said:

I'm beginning to think the secondary market and shortages are being driven singlehandedly by Buffalo Trace.  There is literally 40 feet of aisle dedicated to bourbon at all larger liquor stores! Every major distiller has no real problem with supply other than BT.  I say that because today I saw 1792 FPs just sitting on the shelf, I saw bottles and bottles of ECBP just sitting at Costco, and I'm convinced HH is simply limiting HMBiB to copy BT's system.  It's literally only the whacky pent up demand for BT products that continues to be the real problem.  But to that I just shrug and say oh well, i guess they should be applauded for having a good business model.

Note in my lottery pic above that FP (and even 1792 SB??) are lottery items here as well as ECBP. This market seems different than most of the rest of the country. 

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I'm not sure I follow.  You're saying distilleries should raise prices, but WSR is a bottom shelf mixer?  Why should I pay more than current bottom shelf mixer prices for bottom shelf mixers?  Just because some idiot is willing to pay more than a reasonable price for something doesn't make it actually worth it.  The same thing happened in the stock market in the late 90s and early 2000s: people were buying stocks on the greater fool theory, meaning 'someone is dumb enough to pay more for this stock than I was', rather than because of good fundamentals like P/E ratios, sound management, reliable dividends, innovative new products, etc.  It didn't take but a decade or so for that bubble to burst.  Do you mean that if the distillers raised prices, the bubble would burst sooner and prices would then come back down to what they should be?

So first off, my opinion on WSR is neither here nor there, I am not a barometer for the market as a whole. That was going off a bit on a tangent re: consumer phycology and hype.
 
The market has spoken and by and large very many people are dumb enough to pay a lot of money for Weller, Pappy, BTAC and a handful of other bottles that got popular for one or another reason. My primary argument is that distillers should raise the price on these bottles and pocket the profit directly, rather than watching stores charge massive markup and sit by while black market resellers profit illegally on their product's popularity. The money is being spent by the consumer one way or another, why shouldn't it go to the people who actually make the product?
 
If this would usher a burst to the bubble sooner is an interesting question. I'm not sure the stock market is an apt comparison. Bourbon is a consumable good, and the overall demand for the product represents genuine growth - new customers in the market, many of whom are willing to spend more and more money. Would rising prices eventually burst the bubble? Possibly, however, prices have been rising steadily in the face of significant growth, so I'm not sure where that break point is. But I would guess it's well beyond a price double or even quadruple of Buffalo Trace's most popular, hard to find products.
 
Now to be clear, I'm not suggesting that prices should be raised on every bottle of bourbon. Simply that the bottles which are already being treated more like luxury goods than commodities, should sold at whatever price the market will bear from the producer of the product, not shady middle men. Many will balk at this due to simple self interest, but from a basic economic standpoint it makes sense.

I'm not so sure. On it's face, your comment makes perfect sense. But.....
We know that the carrot of receiving a certain number of allocated bottles each year causes retailers to carry a large number of products they otherwise might not. If a retailer supports a certain "portfolio" throughout the year, and gives it prime real estate in the store, they get the good stuff.
Price it at secondary and that goes away. I think this is why Sazerac holds their prices.  

All three of you make some very good points! As Steve stated though, BT is currently in the best position to continue to drive sales of all of their portfolio of products because of the markets’ somewhat distorted perceived value of many of their products. And I’ll also add that the three tier system adds an additional layer of “encouraged” purchases by retailers of the entire BT product portfolio in order to get access to the allocated stuff, which is close to half of their portfolio these days...and that’s still no guarantee that a retail store will get much of anything.
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7 hours ago, BrokeCal said:

I'm beginning to think the secondary market and shortages are being driven singlehandedly by Buffalo Trace.  There is literally 40 feet of aisle dedicated to bourbon at all larger liquor stores! Every major distiller has no real problem with supply other than BT.  I say that because today I saw 1792 FPs just sitting on the shelf, I saw bottles and bottles of ECBP just sitting at Costco, and I'm convinced HH is simply limiting HMBiB to copy BT's system.  It's literally only the whacky pent up demand for BT products that continues to be the real problem.  But to that I just shrug and say oh well, i guess they should be applauded for having a good business model.

The only major that I think really has some supply problem is Four Roses. At least in terms of having supply for the part of their line that many of us want the most, the private barrel program at ages in the double digits. For years we were spoiled with those, and these days you mainly see stuff like 8 year barrel picks. They just don’t have many older barrels available for those picks right now, or at least they aren’t making them available for those picks. The Limited Edition Small batch continues to be a consistently very high quality LE and there is way more demand than the supply they put out for that. And they also discontinued the Limited Edition Single Barrel after the Elliott’s Select. 
 

I think Four Roses is currently paying a bit of a price for all of the portion of their production that got routed to Bulleit for all those years. I’m sure that was a good short term revenue move for them at the time but over the long run it hurt their future stock of older aged barrels as we are seeing today. 
 

Also as I’ve said a few times in a few threads, the 2019 LE small batch is fantastic. My favorite release of the year. The Al Young release was also awesome, but then again most Four Roses LEs are pretty damn good (although I never loved the 2014 small batch for whatever reason).

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1 hour ago, Clueby said:

Note in my lottery pic above that FP (and even 1792 SB??) are lottery items here as well as ECBP. This market seems different than most of the rest of the country. 

My market, Southern California, might not be as  bourbon crazy as others.  But it is probably the 2nd largest simply because there is 24 million people that live here!  But aside from BT products I've never noticed real shortages that last.

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I completely forgot Sazerac bought Barton a while back.  I suppose it's only a matter of time before they let the BT folks run it the same exact way.  

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17 minutes ago, BottledInBond said:

The only major that I think really has some supply problem is Four Roses. At least in terms of having supply for the part of their line that many of us want the most, the private barrel program at ages in the double digits. For years we were spoiled with those, and these days you mainly see stuff like 8 year barrel picks. They just don’t have many older barrels available for those picks right now, or at least they aren’t making them available for those picks. The Limited Edition Small batch continues to be a consistently very high quality LE and there is way more demand than the supply they put out for that. And they also discontinued the Limited Edition Single Barrel after the Elliott’s Select. 
 

I think Four Roses is currently paying a bit of a price for all of the portion of their production that got routed to Bulleit for all those years. I’m sure that was a good short term revenue move for them at the time but over the long run it hurt their future stock of older aged barrels as we are seeing today. 
 

Also as I’ve said a few times in a few threads, the 2019 LE small batch is fantastic. My favorite release of the year. The Al Young release was also awesome, but then again most Four Roses LEs are pretty damn good (although I never loved the 2014 small batch for whatever reason).

I don't buy much 4R other than the occasional bottle of regular Small Batch.  It's hard for me to justify much else from their line.  I've had a couple bottles of their Standard single barrels and one store pick single barrel but that's about it.  Whenever I go to the 2 liquor stores I usually go to though they always have the Regular, Small Batch, Small Batch Select, their regular Single Barrel and often one store pick SB.  I guess because of that I never thought of it as scarce.

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11 minutes ago, BrokeCal said:

I don't buy much 4R other than the occasional bottle of regular Small Batch.  It's hard for me to justify much else from their line.  I've had a couple bottles of their Standard single barrels and one store pick single barrel but that's about it.  Whenever I go to the 2 liquor stores I usually go to though they always have the Regular, Small Batch, Small Batch Select, their regular Single Barrel and often one store pick SB.  I guess because of that I never thought of it as scarce.

The store picks are harder to come by now and the ages available have dropped from the 10-12 range down to 8-10 generally. Also, you used to pick from all 10 recipes. Now you get around 7.

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35 minutes ago, BottledInBond said:

The only major that I think really has some supply problem is Four Roses. At least in terms of having supply for the part of their line that many of us want the most, the private barrel program at ages in the double digits. For years we were spoiled with those, and these days you mainly see stuff like 8 year barrel picks. They just don’t have many older barrels available for those picks right now, or at least they aren’t making them available for those picks. The Limited Edition Small batch continues to be a consistently very high quality LE and there is way more demand than the supply they put out for that. And they also discontinued the Limited Edition Single Barrel after the Elliott’s Select. 
 

I think Four Roses is currently paying a bit of a price for all of the portion of their production that got routed to Bulleit for all those years. I’m sure that was a good short term revenue move for them at the time but over the long run it hurt their future stock of older aged barrels as we are seeing today. 
 

Also as I’ve said a few times in a few threads, the 2019 LE small batch is fantastic. My favorite release of the year. The Al Young release was also awesome, but then again most Four Roses LEs are pretty damn good (although I never loved the 2014 small batch for whatever reason).

They are most certainly paying a price for all those years supplying Bulleit. That arrangement was made long before the boom and nobody could foresee what would happen in a short amount of time. It also didn't help that they were named distillery of the year two year in a row or something like that. That brought more people into the fold who were previously ignoring them due to their old reputation as being swill. Rutledge turned things around quickly but it took longer for those old attitudes to change.

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23 minutes ago, BrokeCal said:

I completely forgot Sazerac bought Barton a while back.  I suppose it's only a matter of time before they let the BT folks run it the same exact way.  

You mean by making good whiskey that everyone wants to the point that there are more buyers than supply?

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3 minutes ago, flahute said:

You mean by making good whiskey that everyone wants to the point that there are more buyers than supply?

Ha ha, if thats truly all it is then that's great.

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5 hours ago, HoustonNit said:

Uh oh how dare you say anything negative towards BT, be prepared to feel the scorn of its defenders. 

 

Nah, its gotten tiresome. 

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13 hours ago, macdad said:

No offense, but this is crazy to me.  There is no way I would stand in line from 8:30 the night before to buy something, let alone a bottle of bourbon.  Seeing that you were 110 in line, I just can't comprehend it.  

 

Don't get me wrong,  I really want to try some of the hard to find bourbons, but I will be patient.  Sooner of later, people will run out of money or move on, then I will be able to get some. 

 

I sort of feel like I would be severely let down though.  Not sure any bourbon could live up to the hype that surrounds Pappy, Blanton's, etc.  I was able to score a bottle of Eagle Rare and was a bit disappointed.  I personally like RR10 better.  People that I work with go nuts over ER.  They buy it up like it has been discontinued.  

 

All this, of course, is just my opinion.  Obviously, there is a significant amount of disposable income in this country and the boom is going strong!

No offense taken.  When you look at it from the standpoint of waiting 13 hours in line for bourbon it is completely irrational.  But the other end of it is these events are actually really fun.  You get to spend time with other whiskey nerds and just chat with them.  Maybe a few generous pours were also shared too.  All said it was a really great time and like 90%+ of the people are really great.

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11 hours ago, JoeTerp said:

No offense taken.  When you look at it from the standpoint of waiting 13 hours in line for bourbon it is completely irrational.  But the other end of it is these events are actually really fun.  You get to spend time with other whiskey nerds and just chat with them.  Maybe a few generous pours were also shared too.  All said it was a really great time and like 90%+ of the people are really great.

This is a good point. I’ve never done 13 hours and likely never would. But I’ve waited in line for a couple hours a couple times and I have had good experiences in terms of the socializing aspects. Often a few fun sample bottles being passed around, I’ve made a few new friends that I’ve shared local intel with, and I’ve run into people I know and caught up with them. The last time I went I got nothing from the lottery aspect, but all that other stuff actually made it probably worthwhile for me. 

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